Futures Bill Terminology Explained: Understand These 7 Terms to Avoid 90% of Futures Losses
Why can't you withdraw even when you've made a profit? Why is there a sudden deduction labeled "auto-deleveraging"? Why is there still remaining balance after liquidation?
The answers to these questions are hidden in futures bill terminology. Many traders miss profit-taking opportunities or incur unexpected losses simply because they don't understand these terms.
This article will explain the 7 core terms in futures bills in the simplest language, supported by 12 real-world examples.
⚠️ Risk Warning
- Terminology Misunderstanding Risk: Not understanding the difference between realized and unrealized PnL may lead to poor fund management
- Withdrawal Restriction Risk: Realized PnL cannot be withdrawn before settlement, which may affect liquidity
- Liquidation Risk: Lack of understanding of liquidation mechanisms may result in losing all margin in extreme market conditions
- Auto-Deleveraging Risk: Profitable users may share losses from other users' bankrupt positions (usually 0.1%-0.5% of profits)
- Delivery Price Risk: Delivery contracts settle at a 1-hour average price, which may differ from the current market price
1. Core Terminology Explained
1. Realized PnL
Definition: Profit or loss generated from closed positions, calculated from the last settlement time to the current time.
Simple Explanation: Profit or loss from positions you have already closed — this money is already "in your pocket."
Key Features:
- ✅ Included in account equity
- ✅ Can be used as margin for new positions
- ❌ Cannot be withdrawn immediately (must wait for settlement)
- ✅ Can be transferred after settlement
Case 1: Withdrawal Restriction of Realized PnL
On March 1, Li goes long BTC perpetual:
- Entry price: 60,000 USDT
- Exit price: 62,000 USDT
- Position: 1 BTC
- Realized PnL: +2,000 USDT
Li sees the 2,000 USDT in account equity but cannot withdraw it because perpetual contracts settle daily at 4:00 PM, and realized PnL cannot be withdrawn before settlement.
Solution: After settlement at 4:00 PM, the 2,000 USDT becomes withdrawable.
Case 2: Using Realized PnL as Margin
Wang's account:
- Initial margin: 5,000 USDT
- Realized PnL from first trade: +1,000 USDT
- Total equity: 6,000 USDT
Wang can use 6,000 USDT as margin for new positions, but must wait for settlement to withdraw the 1,000 USDT profit.
2. Unrealized PnL
Definition: Floating profit or loss from open positions. At 4:00 PM daily settlement, unrealized PnL is converted into realized PnL and reset.
Simple Explanation: "On-paper" profit or loss that fluctuates with market price and is not yet locked in.
Key Features:
- 📊 Changes in real time with market price
- ❌ Not withdrawable
- ✅ Included in account equity (affects liquidation price)
- 🔄 Converted to realized PnL at daily settlement
Case 3: Fluctuation of Unrealized PnL
Zhang goes long ETH:
- Entry price: 3,000 USDT
- Current price: 3,200 USDT
- Position: 10 ETH
- Unrealized PnL: +2,000 USDT
After 1 hour, ETH drops to 3,100 USDT:
- Unrealized PnL becomes: +1,000 USDT
This value keeps fluctuating until the position is closed.
Case 4: Settlement of Unrealized PnL
Zhao opens a BTC long at 3:00 PM:
- Entry: 60,000 USDT
- Settlement price at 4:00 PM: 61,000 USDT
- Position: 1 BTC
- Unrealized PnL: +1,000 USDT
After settlement:
- Unrealized PnL resets to zero
- Realized PnL increases by 1,000 USDT
- Entry price resets to 61,000 USDT
Next day, if BTC rises to 62,000 USDT, unrealized PnL is recalculated as +1,000 USDT.
3. Liquidation
Definition: Forced closing of positions when margin is insufficient.
Isolated Margin: Only the margin allocated to that position is lost.
Cross Margin: All account equity is used and may be lost.
Key Differences:
| Item | Isolated Margin | Cross Margin | |------|----------------|--------------| | Risk Isolation | ✅ Yes | ❌ No | | Margin Usage | Fixed | Entire account | | Impact | Loss limited to position | Entire account at risk | | Use Case | Risk control | Max efficiency |
Case 5: Isolated Liquidation
Sun uses isolated margin:
- Total funds: 10,000 USDT
- Margin allocated: 2,000 USDT
- Leverage: 10x
When BTC falls sharply, only the 2,000 USDT is lost; the remaining 8,000 USDT is unaffected.
Case 6: Cross Liquidation
Zhou uses cross margin:
- Total funds: 10,000 USDT
- Leverage: 10x
When losses reach 10,000 USDT, the entire account is liquidated.
4. Delivery Settlement
Definition: At contract expiry, positions are settled automatically at the 1-hour average price.
Simple Explanation: Delivery contracts have an expiry date; positions are closed automatically using an average price.
Key Features:
- 📅 Fixed expiry time
- 📊 Uses 1-hour average price
- 🔄 PnL becomes realized
- ✅ Withdrawable after settlement
5. Liquidation Surplus
Definition: The difference between liquidation price and actual execution price.
Simple Explanation: If execution is better than expected, the extra amount is returned.
6. Auto-Deleveraging (ADL)
Definition: When losses exceed margin, profitable users share the deficit proportionally.
Simple Explanation: In extreme markets, profitable traders may absorb part of others' excess losses.
7. Other Common Terms
Funding Rate: Periodic payments between long and short positions.
Mark Price: Reference price for liquidation calculations.
Maintenance Margin Ratio: Minimum margin required to keep a position open.
2. How to View Futures Bills
Access Path
App:
- Open the app
- Go to "Assets"
- Select "Futures Account"
- Tap "Bills"
Web:
- Log in
- Go to "Assets"
- Select "Futures Account"
- View "Bill Details"
3. FAQ
Q1: Why can't realized PnL be withdrawn?
A: It must wait until settlement.
Q2: Does unrealized PnL affect liquidation?
A: Yes, it affects account equity.
Q3: Which is safer, isolated or cross margin?
A: Isolated is safer.
Q4: How to reduce ADL risk?
A: Close positions before settlement and manage profits.
4. Practical Tips
- Check bills regularly
- Manage funding costs
- Use proper margin mode
- Set stop-loss and take-profit
5. Summary
Understanding these 7 core terms helps you clearly track every trade and make better decisions.
